Browsing all articles tagged with asset
Jun
1

Banks In The Dark Over $15 Billion of Promised Rosneft M&A business

Banks that assist Russian oil company Rosneft finance its $55 billion buyout of rival have been left waiting for their payback a share in $15 billion in asset sales projected to follow the deal.

State oil company Rosneft’s takeover of this year aimed to generate a major oil group producing more oil than however it also tightened the Russian government’s grip on the country’s energy sector.

The asset sales promised by Rosneft Chief Executive Igor Sechin would offload less-profitable businesses to turn the company into the major oil player the CEO has stated he wants it to be. The delay demonstrate Rosneft has a lot on its plate integrating and that the sales are on the back burner.

Rosneft had dangled the juicy divestment mandates at the banks in exchange for a $29.8 billion loan the largest in Russia’s history on good terms, all the lending banks are waiting. We thought asset sales and refinancing bonds would kick start straight following the closing.

Rosneft’s slow motion is annoying the banks as they would earn fat fees from advising the oil giant on the asset sales this year, which would assist boost M&A revenues in an otherwise arid deal making landscape.

M&A activity across all sectors is losing 7 percent in Europe, Africa and Middle East since January partly due to the impact of the euro zone crisis on business confidence.

Banks that uphold big balance sheets throughout the financial crisis have been hoping to use this muscle to win lucrative M&A advisory business from competitor which had to shrink partly to meet tough European capital rules.

Banks frequently use their balance sheets to offer cheap loans to corporate clients to secure higher margin business such as share or bond issues or M&A work.

Big balance sheets helped Deutsche Bank and Barclays to achieve number 2 and 3 rankings in M&A league tables previous year, challenging US rival Goldman Sachs which had the top slot.

May
11

ECB Says Has Tools Left to Act if Required

ECB policymakers said that European Central Bank still has room to plan should the euro zone economy persistent to worsen following it cut interest rates to a new record low previous week. The ECB cut its main rate to 0.5 percent previous Thursday.

Yves Mersch, a member of the ECB’s six-man Executive Board stated the bank still had tools at its disposal, however added that it could only spur lending to small euro zone companies in combination with other European institutions.

Joerg Asmussen stated the ECB had an open mind about what it could do to renew lending to small and medium-sized enterprises known as SMEs a growing concern for the central bank, principally in the crisis-stricken periphery countries.

Mersch said in a panel discussion in the northern German city of Aachen that we still have tools in our toolbox we are not a toothless tiger.

The ECB stated previous week it had set up a task force with the European Investment Bank known as EIB to assess ways to unblock lending to SMEs, for example by supporting a market for asset-backed securities known as ABS based on SME loans. ABS would permit banks to pass some credit risk on to other investors, enabling them up to lend more.

The move to promote ABS is controversial mainly in Germany, because during the financial crisis such securities became toxic due to the default of housing loans that underpinned them.

We have an open mind to seem at all things that we can do within our mandate and this relates to how can the market for asset backed securities, particularly backed by SME loans, be revitalized in Europe.

Asmussen was responding to a question regarding a Wednesday article in German newspaper Die Welt, which cited a central bank source as saying a majority of ECB Governing Council members seemed to be in support of the central bank buying ABSs itself.

May
11

Precious Metal Fall 1.5 percent on US Dollar Gain, Posts Weekly Plunge

Yellow metal knock down almost 1.5 percent on Friday as a sharp increased in the US dollar against the Japanese yen triggered technical selling, sending the metal to a two-week low.

Bullion slip for a second consecutive day as the yen plummeted to its weakest against the US dollar in more than four years on Friday, a day following the US currency climbed above the 100-yen level. The US dollar rally also weighed on industrial commodities led by crude.

Gold posted a weekly fall of almost 2.5 percent as continued outflows in gold-backed exchange-traded funds more than offset strong physical retail demand following yellow metal’s historic selloff in mid-April.

Precious metal’s sharp losses previous month has intensified a disconnect among funds that sold on dissatisfaction over gold’s under performance and individual investors who could not get sufficient physical gold coins and bars at bargain prices.

Miguel Perez-Santalla, vice president of BullionVault, an online physical gold and silver market it’s all about the greenback strength, that’s where all the fast money is going. He said, I believe this is another opportunity for physical buyers.

Spot gold knocks down as much as 2.5 percent to a low of $1,420.60 per ounce earlier in the session. It was down 1.3 percent at $1,438.51 per ounce by 2:28 p.m. (1828 GMT)

US Comex division gold futures for June delivery settled down $32 at $1,436.60 per ounce, with trading volume almost 10 percent over its 30-day average.

Carlos Sanchez, director of commodities and asset management at CPM Group said yellow metal accelerated losses following sell-stops were triggered below technical support at $1,450 per ounce.

Gold’s failure to break above a $40 trading range in the precedent two weeks suggested sentiment remains weak following the metal plunged to $1,321.35 an ounce on April 16, its lowest in more than two years.

May
1

US Miners Union Charts New Course to Save Benefits in Bankruptcy

As mineworkers and retires battle to salvage their allowances and benefits from the bankruptcy of Patriot Coal Corp, lawyers for their union are annoying an unusual gambit and one that may be a test circumstance for workers rights when companies spin off assets.

With a tough road ahead in bankruptcy court in St. Louis, the United Mine Workers of America has brought a similar lawsuit 500 miles away, in West Virginia, the heart of coal country.

That lawsuit is not against Patriot but instead challenges Peabody Energy Corp, which spun Patriot off in 2007 saying the former parent must pay retiree pensions and remunerations if Patriot cannot.

But experts say the lawsuit is a long shot, if successful it could upend how company’s similar Peabody dispose of assets in the future. And, for mineworkers, the lawsuit seeks to preserve a right to lifetime health and pension coverage that dates back to the Truman administration.

The union claims that when Peabody spun Patriot off in 2007, it knew the new company was going to fail. Parting with only almost 16 percent of its assets, Peabody loaded Patriot up with approximately 60 percent of its post-employment benefit liabilities, the union alleges.

Patriot declared bankruptcy in July, and has said it must cut $150 million a year in employment costs to redeem profitability. It is seeking permission this week from a judge in US Bankruptcy Court in St. Louis to impose drastic cuts, which the union has cast as nowhere near fair.

With the odds weighted against workers in bankruptcy court, where their claims are subordinate to the claims of creditors and lenders, the union last drop brought a separate lawsuit against Peabody in federal court in Charleston, West Virginia. The lawsuit also names as a defendant Arch Coal Inc, which in 2005 sold certain units that were ultimately bought by Patriot after its spinoff.

Contacts like Peabody’s, in which it spun off liabilities as well as assets, are not unusual. If the union’s lawsuit is successful, it could set a pattern by allowing workers to keep a company on the hook for the liabilities it tries to offload.

Apr
24

Gold Plunge on Stronger US Greenback, ETF outflows

Yellow metal knock down more than 1 percent on Tuesday as a stronger US dollar put pressure on prices and as the outflow from the world’s leading gold exchange-traded fund known as ETF accelerated and accentuated an investor shift towards equities and other assets.

At the midsession, bullion along with markets in stocks, oil, bonds and other commodities, was roiled temporarily by a bogus report of explosions at the White House. Bullion pulled up off its lows on the fake report.

The early turn down retraced some of gold’s 1.6 percent rally from a day earlier, which was encouraged by strong physical purchases.

Heraeus Precious Metals Management metals trader David Lee said that he believe the whole commodities space came off because of the weak PMI out of Europe and the weak PMI out of China, particularly Germany. That combination is dragging everything from silver to copper to platinum and palladium down. And yellow metal is going down in sympathy as it’s part of the basket.

Traders stated gold prices chop down to session lows in overnight dealings when the US dollar firmed in reaction to weaker April manufacturing statistics from both Germany and China, and then lingered at the lower levels.

Shortly following 1 p.m. (1700 GMT), precious metal prices pulled up off their lows, US government debt prices surged briefly and stocks knock down sharply following a false tweet from the Associated Press stated there had been two explosions at the White House and that President Barack Obama had been injured.

Gold knock down 1.4 percent to a session low of $1,405.44 per ounce and had pared losses to $1,412.70 by 3:14 EDT (1914 GMT), off 0.87 percent. Precious metal has dropped 15 percent this year.

US gold futures for June delivery were losing 0.61 percent at $1,412.30 per ounce.

Traders said gold’s retreat off the one week high it reached a day earlier reproduce investor nervousness regarding holding on to precious metal positions for long. Many yellow metal bulls were caught by surprise a week ago when bullion slid to its biggest-ever daily loss in Greenback terms.

Gold was also under pressure from a strong dollar and bounce back of equity markets following sales of new US single family homes climbed in March, indicating the housing market recovery remains on track.

Commerzbank analyst Carsten Fritsch said that bullion is lower as well as other commodities, including base metals oil and crude, which knock down following weaker than expected economic data out of China and Europe, which gave a boost to the dollar.

In other markets, copper knock down to an 18-month low and crude oil was down nearly 1 percent because data revealed a slowdown in business activity in Germany and China in April. The figures heightened worries over global growth.

Apr
20

Paulson’s Advantage Fund Hurt by Fall in Gold

Hedge fund billionaire John Paulson’s best-known fund losing 2.4 percent in April, mostly due to the sharp sell-off in precious metal. The Paulson & Co Advantage fund is making money for the year however just barely with a 1.3 percent addition.

Gold is one of the worst performing assets this year following rising mightily following the financial crisis. The precious metal has dropped 17 percent this year including a 13 percent fall in April alone.

The fund’s significant holdings in numerous gold mining stocks, including a bet on AngloGold Ashanti Ltd, which is losing 40 percent this year, have considerably cut into the Advantage fund’s returns.

The sharp fall appears to have caught a number of hedge fund managers like Paulson by surprise. Coming week he intends to update his clients regarding all of his funds, including a fund dedicated specially to investing in gold.

Shares of companies tied to the performance of yellow metal, including the SPDR Gold Trust the largest gold exchange traded fund also have plunged sharply. Financial information firm Markit said this year investors have pulled $10 billion out of the precious metal ETF as of Wednesday.

The fund manager, lionized following a big bet against the overheated housing market in 2007 that made golds for his investors, has floundered trying to replicate the success in recent years.

Paulson, who has made money on bullion up until this year, has long held firm to the view that inflation will ultimately rebound, making yellow metal a prudent hedge. However in the wake of the selloff the firm has sustained losses in the hundreds of millions of US dollars in several funds that invest in yellow metal.

Assets at his firm have slumped to $18 billion down from $38 billion in early 2011 due to redemptions and poor performance. Over the past two years the Advantage fund and a leveraged version of the fund have posted some of the most horrible numbers in the $2.2 trillion hedge fund industry.

At the end of the first quarter, the Advantage policy, which includes the two funds and managed accounts had almost $4.6 billion in assets.

Apr
13

Gold Drop into bear market on institutional Migration

Yellow metal sank more than 5 percent on Friday, entering bear market territory as institutional investors fled gold in favor of other safe-haven assets amid concerns regarding central bank sales and souring sentiment.

The span of the sell off will underscore some expectations that gold’s meteoric rally may end following 12 years of gains.

Robin Bhar, Societe General analyst stated the scale of the turn down has been absolutely breathtaking, they tried to rally and that just did not get anywhere, there has not been any downside support it’s like a knife through butter.

Selling became heavy following an unexpected contraction in US retail sales statistics, which hurt stocks and supported the US dollar. It increased to pressures that were building this week from numerous factors, including a draft plan for Cyprus to sell gold and outflows from exchange traded yellow metal funds.

The precious metal slide below $1,500 per ounce for the first time since July, 2011. Yellow metal posted its largest weekly decline since December, 2011.

The speed of the sell-off appeared tied to instability in the price of Japanese government bonds, which has forced certain holders to sell other assets to meet the risk modeling of their investment portfolios.

The spot price of gold strike a low of $1,476 per ounce, down 5.3 percent on the day. For the week, it showed a turn down of more than 6 percent, in its largest weekly drop since December 2011, bonds rallied on Friday.

Geoffrey Fila, associate portfolio manager at Galtere Ltd, commodities focused hedge fund in New York with almost $600 million under management. Could it retest $1,300 or $1,200 on a short term technical basis? Absolutely yes.

Losses in precious metal accelerated and trading volumes ballooned following prices fell through key support at $1,521 per ounce. The market is down some 23 percent below a record peak of $1,920.30 strike in September 2011. Investors define a bear market as a turn down of 20 percent or more from a market high.

US gold futures also strike their lowest since July 2011, with metal for June delivery declining to as low as $1,476 per ounce by 5:20 p.m. EDT (2150 GMT). It settled at $1,501.40, losing 4.1 percent.

Apr
4

Gold About 9 Month Weakest, Investors Leave Risky Assets

Precious gold slumped for a third straight session on Thursday, holding near a nine month low strike during the last session, following a steep decline in equities and disappointing US private sector job description prompted investors to cash in gold to cover losses.

Markets are now eyeing the key monthly US nonfarm payrolls statement on Friday that will possibly confirm outlook that the Federal Reserve will keep its extremely accommodative monetary policy.

US companies hired at the lowest pace in five months in March as recent strong demand for construction jobs fade, as growth in the huge services sector slowed, signs that the economic upturn could be hitting a soft patch.

Joyce Liu, an investment analyst at Phillip Futures in Singapore said that the environment for bullion is pretty bearish now. He think if yellow metal tests the lower trend channel it has the potential to fall to $1,530 level.

As for North Korea he think investors are considering the threats more like a joke. They are not reacting because if North Korea is really going to launch a nuclear loaded missile. Funds are moving out of precious metal as there’s less need for safe haven.

The US state on Wednesday it would soon send a missile defense system to Guam to defend it from North Korea, because the US military adjusts to what Defense Secretary Chuck Hagel has called a real and clear threat from Pyongyang.

Yellow metal lost $3.66 per ounce to $1,553.69 by 0041 GMT following declining to $1,549.69 on Wednesday its lowest level since June. Gold a traditional safe haven that climbed more than a percent previous month, also failed to respond to growing geopolitical tensions in the Korean peninsula. US gold future for June delivery was stable at $1,554.00 per ounce.

Doubts that central banks’ money printing to buy assets will stoke inflation have been a key driver in enhanceing yellow metal, which rallied to an 11 month high in october previous year following the Fed announced its third round of aggressive economic stimulus. Bullion price is in our observation, in bubble territory.

Gold future for June delivery knock down $22.40 per ounce or 1.4%, to settle at $1,553.50 per ounce on the Comex division of the New York Mercantile Exchange.

Mar
28

Federal Reserve Doves In No Rush To Scale Back Asset Purchases

Primary supporters of the Fed’s bond buying program are not rushing to scale back the swiftness of purchases as the job market improves.

Charles Evans, the president of the Chicago Federal Reserve Bank and a leading architect of the Fed’s specially loose policy, advice a go-slow approach to making any alteration to the $85 billion per month purchases of mortgage and Treasury’s backed securities.

Charles Evans further said that he assumed this is the summit where we have to be patient and let our policies work.

He further said that he prefer and suppose it is best that we carry on to provide strong confidence that we are going to be doing appropriate accommodative policies to get the economy going another time.

Fed will have to have assured that the economy was on solid footing in the second half of the year prior to changing policy. That could simply mean that we require to work our way through the second half prior to we have sufficient confidence that growth is strong enough.

Some other Fed officials are excited for the Fed to diminish the asset purchases. A few believe the Fed should start narrowing as soon as possible.

The Fed is currently buying $40 billion of mortgage-backed securities and $45 billion in long-term Treasury’s per month. Following a two day conference previous week, Ben Bernanke, Fed Chairman said that the Fed wanted to be convinced that current improvement in the labor market was sustainable prior to imitating the purchases.

William Dudley, the president of the New York Fed said that he expected the fed would ultimately scale back the speed of the purchases.

Although Evans argued that the asset purchases were helping the economy. He can not perceive that those are the bound for doing less.  He want to be really careful regarding the signal that reducing bond buying would be.

Evans stated that he was open-minded and a couple of months of job growth above 300,000 would get his concentration and in February, 236,000 jobs were created.

Mar
22

Easy Federal Reserve Softens Fiscal Policy Strike On Economy

According to economists who have been scrambling to raise their growth forecasts, the Fed ‘s aggressive easing of monetary policy is demonstrating unexpectedly effective at blunting the blow to the US economy from tighter fiscal policy.

Economists had feared deep government spending cuts and higher taxes would exploit growth in the first quarter, however a series of strong economic data has so far proven them wrong. And they principally blame the Fed.

Tom Higgins, global macro strategist at Standish Mellon Asset Management in Boston said that the monetary policy is launch to gain some traction here.

According to Higgins, if it were not for the monetary incentive the economy would perhaps facing growth of a 1 percent annual rate or less, he anticipate growth to come in at a 2.5 percent pace in the first quarter.

The US central bank has held overnight interest rates near zero since December 2008 and has pushed around $2.5 trillion into the economy by acquiring mortgage-backed bonds and Treasury debt in a bid to promote faster growth and decreasing unemployment.

On Wednesday, it recommitted to plans to buy $85 billion worth of bonds each month and stated it would keep buying assets until it sees a considerable improvement in the labor market.

These activities have assist to put the economy in better shape to compact with the end of a 2 percent payroll tax cut, higher tax rates for rich Americans and $85 billion in across-the-board government spending cuts which is known as the sequester.

The easy money position has given a increase to interest rate sensitive sectors of the economy, such as housing and autos.

The vowed to easy policy also emerges to be lifting business confidence, which in turn is underpinning stock market and the job growth. Non-farm payrolls augmented 236,000 in February and the jobless rate knock down to a four-year low of 7.7 percent.